NASDAQ:EWCZ European Wax Center Q4 2023 Earnings Report $3.28 +0.08 (+2.50%) Closing price 04/25/2025 04:00 PM EasternExtended Trading$3.28 0.00 (-0.15%) As of 04/25/2025 04:01 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast European Wax Center EPS ResultsActual EPS$0.07Consensus EPS $0.06Beat/MissBeat by +$0.01One Year Ago EPSN/AEuropean Wax Center Revenue ResultsActual Revenue$56.33 millionExpected Revenue$53.98 millionBeat/MissBeat by +$2.35 millionYoY Revenue GrowthN/AEuropean Wax Center Announcement DetailsQuarterQ4 2023Date3/6/2024TimeN/AConference Call DateWednesday, March 6, 2024Conference Call Time8:00AM ETUpcoming EarningsEuropean Wax Center's Q1 2025 earnings is scheduled for Wednesday, May 21, 2025, with a conference call scheduled on Wednesday, May 14, 2025 at 8:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Earnings HistoryCompany ProfilePowered by European Wax Center Q4 2023 Earnings Call TranscriptProvided by QuartrMarch 6, 2024 ShareLink copied to clipboard.There are 11 speakers on the call. Operator00:00:00Good morning, ladies and gentlemen. Thank you for standing by. Welcome to European Wax Center's 4th Quarter and Full Year 2023 Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a Q and A session. Operator00:00:17In order to facilitate as many participants as possible, we ask that you please limit yourself to one question and one follow-up during the Q and A session. On the call today are David Willis, Chief Executive Officer and Stacy Shirley, Chief Financial Officer and Andrea Wasserman, Chief Commercial Officer. I would now like to turn the conference over to Stacy for opening remarks. Ma'am, you may begin. Speaker 100:00:47Thank you, and welcome to European Wax Center's 4th quarter fiscal 2023 earnings call. For today's call, David will begin with a brief review of our Q4 and full year performance and discuss our priorities for fiscal 2024. Then I will provide additional details regarding our fiscal 2023 financial performance and our fiscal 2024 outlook. Following the prepared remarks, we will be available to take questions. Before we start, I would like to remind you of our legal disclaimer. Speaker 100:01:17We will make certain statements today, which are forward looking within the meaning of the federal securities laws, including statements about the outlook of our business and other matters referenced in our earnings release issued today. These forward looking statements involve a number of risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings as well as our earnings release issued today for a more detailed description of the risk factors that may affect our results. Please also note that these forward looking statements reflect our opinions only as of the date of this call, and we take no obligation to revise or publicly release the results of any revision to our forward looking statements in light of new information or future events. Also during this call, we will discuss non GAAP financial measures, which adjust our GAAP results to eliminate the impact of certain items. Speaker 100:02:09You will find additional information regarding these non GAAP financial measures and a reconciliation of these non GAAP to GAAP measures in our earnings release. A live broadcast of this call is also available on the Investor Relations section of our website at investors. Waxcenter.com. I'll now turn the call over to David Willis. Speaker 200:02:30Thank you, Stacey, and good morning, everyone. Thank you for joining us today. We ended 2023 on a strong note with 4th quarter performance in line with our expectations. We made progress on our strategy of expanding net new centers and driving in center sales, which are both key to the European wax center growth story. Additionally, we were pleased with our ability to drive in center reservations during the quarter, which capped off a solid year of growth for European Wax Center. Speaker 200:03:04In 2023, we opened 100 net new units, driven by our committed franchisees and are proud to have delivered meaningful top line and bottom line growth across the board, generating $955,000,000 in system wide sales, dollars 221,000,000 in revenue and $76,000,000 in adjusted EBITDA. Even in a challenging macroeconomic environment, the European wax center business model is consistent, anchored by the resiliency of our core guests whose commitment to their personal care routines did not waver throughout the year. Reflecting on my 1st 6 months as CEO, I could not be prouder of our teams. I want to thank our associates, franchisees and in center partners for their relentless focus on the work that drives results for our network and for living our values every day. This year, we're excited to celebrate the 20th anniversary of the European Wax Center brand. Speaker 200:04:11In 2004, our founders created this category of out of home waxing when they realized that waxing was an essential and recurring service often performed in salons as an afterthought. They introduced a high standard of professionalism by creating a business concept solely focused on a consistent hygienic and efficient wax experience. 20 years later, we remain the undisputed leader in this industry. I believe that our leadership team and board have advanced our founders' vision and set our company on a path to unlock the true potential of European wax center with an asset light, predictable, high growth franchise model. In 2023, we achieved several milestones as a brand from strengthening our leadership team to deepening our relationships with our core guests and franchisees to innovating our product offerings. Speaker 200:05:16We work to position European Wax Center for further growth. Importantly, we delivered on both of our key growth vectors, expanding our footprint through new net center openings and driving in center sales, which benefits system wide sales and same store sales growth. I'll discuss both of these in more detail now. I'll start with our unit growth vector. In 2023, we delivered over 10% unit growth for a 2nd year in a row, surpassing 1,000 centers nationwide and we are incredibly pleased to have met the high end of our fiscal 2023 net new unit guidance. Speaker 200:06:02We ended the year strong in Q4 by opening 18 net new centers across 13 different states. 100% of our new center openings in 2023 came from existing franchisees, which speaks to the commitment and excitement they continue to have for the European Wax Center brand and our business model. Looking ahead in 2024, we expect to deliver 75 to 80 net new units, in line with our high single digit unit growth algorithm. We're pleased that our franchisees remain well capitalized and committed to growing with our brand. Their continued demand underpins our robust development pipeline of over 370 commitments and provides us visibility to be able to continue to deliver against our high single digit unit growth algorithm for 2025 and over the long term. Speaker 200:07:05In partnership with our franchisees, we are focused on growing the top line in an existing centers, particularly through new guest acquisition, while taking a deliberate approach to new center openings in 2024 with focus on markets with less development activity over the last few years. To support our franchisees, our operations team is putting an even greater focus on refining and evolving our new center opening best practices, which in turn enhances our already strong unit economics. One initiative we're particularly excited about is the network wide launch of our improved data driven pre opening playbook. This playbook highlights some of our best in class centers that opened on day 1 with both the right number of new guests in their file and appropriately trained staff, which led to higher sales, revenue and predictability compared to centers that opened without these elements. We believe this playbook will be a powerful tool for our franchisees moving forward. Speaker 200:08:17Before I turn to our next growth vector, I wanted to touch on our recent brand conference. Just 2 weeks ago, our teams were in Las Vegas with our franchisees. We spent the time hearing from those across our team and our network, sharing best practices and aligning on areas of focus for the brand and franchisees moving forward. We celebrated the wins we've had over the last year, but more importantly kept our focus on the growth and opportunity we have together ahead. Our franchisees walked away from the conference feeling excited and confident in the direction of European Wax Center. Speaker 200:08:59Turning to our 2nd growth vector, driving in center sales, which benefits system wide sales and same store sales growth. I'll start with our guest trends in Q4. As expected, our core guests, which include both Wax Pass and routine guests remained consistent in their frequency and spend. These guests remain committed to their personal care routines a recurring and reliable revenue stream for our brand. In addition, exiting our Q3 earnings call, transactions among our less frequent guests remained stable. Speaker 200:09:40Driven by these stable transaction trends in our refined media strategy, full year 2023 system wide sales, revenue and same store sales came in above the midpoint of the guidance we provided in November. As we discussed last quarter, we remain focused on driving visits from both new and existing guests as well as attracting more guests to the brand through our attract more, buy more, visit more marketing strategies under Andrea's leadership. We believe that our evolved approach to our commercial and data insights capabilities Speaker 300:10:19as well Speaker 200:10:19as our data driven marketing and media strategy will allow us to deliver a year of in center sales growth at 5% to 7% for system wide sales and 2% to 5% same store sales growth in 2024. There continues to be a vast opportunity to drive new guests to the brand. And as discussed last quarter, we engaged a new media agency focused on implementing a streamlined media strategy across all of our paid digital channels and search efforts. This strategy launched in Q4 with a singular focus of driving more guest reservations in centers. A key pillar of our strategy is to optimize our approach to paid media by improving the efficiency of our media spend. Speaker 200:11:14I'm pleased to share that since our new media search and performance creative agency took over in Q4, we've seen an improvement in our average cost per reservation across various search engines and social media platforms. While it is still early and we understand it will take time for this strategy to be fully implemented, we are off to a solid start and have good early reads on the reach, frequency, targeting and creative that will drive further efficiencies in these channels. We also see several areas of opportunity for us to continue to increase share of wallet from our existing guests. We previously shared that we've been testing brow tinting in select centers. Historically, guests may have waxed their brows at European Wax Center, but went somewhere else to get them tinted. Speaker 200:12:12Our team has worked to develop a proven brow tint formula, which guests have enthusiastically responded to. We've been very encouraged by our ongoing tests as we've learned that it is a lever to bring new guests to the brand and we look forward to expanding this service to our network soon. Increasing frequency among our existing guests and converting non core guests to Wax Pass user also remains a priority. As you know, Wax Pass holders visit more than twice as often and spend more than twice as much with the brand compared to our less frequent guests, making the Wax Pass membership program our most powerful frequency driver. As we've evolved our data and technology functions, we've implemented key communication flows to encourage wax pass consideration and purchase in our marketing channels. Speaker 200:13:12Last quarter, wax passes and gift cards were available online for the first time in our brand's history, which proved successful in retaining both new and existing guests. In addition, through our guest survey work, we've learned that while guests are attracted to the wax pass, they are less likely to commit to purchasing a full 9 plus service wax pass until they visited and experienced the services we provide a few times. To encourage conversion and increased frequency and loyalty, we tested a 3 plus 1 wax pass offered only to new guests to incentivize trial by driving additional visits. We were pleased with the results of the test in the Q4 and plan to roll out this network wide this spring. On the operations side, we have implemented new leadership to oversee the local marketing team supports and works directly with our franchisees. Speaker 200:14:18We've also repositioned our field trainers by embedding these experts in local markets to further aid and coach franchisees and center associates in driving ticket value and frequency in centers. These in turn drive system wide sales. Ultimately, we are confident in our ability to drive new guests to the brand while increasing average ticket value and frequency among existing guests through the initiatives I've outlined, which we believe will help us achieve another strong year of top line growth in 2024. Before I pass it to Stacy, I wanted to touch on our laser hair removal pilot. As we've discussed over the last two quarters, we believe that offering additional hair removal modalities could be an effective method of attracting new guests to the brand, increasing share of wallet from existing wax guests and enhancing already robust four wall economics over time. Speaker 200:15:23We launched our pilot laser test in 6 New York area centers in Q4 and have been pleased with the results seen thus far. We were able to generate strong sales from both new and existing guests while minimalizing cannibalization of existing core waxing and planning to make additional investments to support this test in other select states throughout the year. Stacy will provide more detail on this shortly. While we see this as a potential additive opportunity to expand our brand and the model, European Wax Center remains the dominant player in our category with the strong and resilient core service offering waxing. As we introduce laser on a pilot basis, we believe we are uniquely positioned to leverage our scale and our footprint as the experts in out of home hair removal. Speaker 200:16:29With that, I'd like to hand the call over to Stacy Shirley to review our financial performance and our guidance details for fiscal 2024. Stacy? Speaker 100:16:40Thanks, David. Before I begin my remarks, I'd like to remind everyone that in some instances, I will speak to adjusted metrics on this call. And as I mentioned, you can find reconciliation tables to the most comparable GAAP figures in our press release and 10 ks filed with the SEC today. Turning to our financial performance. As David mentioned, we delivered strong results in line with expectations, thanks in part to our core guests remaining committed to their waxing routines. Speaker 100:17:09Q4 system wide sales increased 7.2% to $241,700,000 and total revenue increased 5.2 percent to $56,300,000 Top line growth was primarily a result of unit expansion including 18 net new centers during the quarter. Same store sales also increased 1.3%. From a profit standpoint, 4th quarter gross margin improved approximately 2 40 basis points to 72%, primarily due to favorability in our wholesale margins. 4th quarter SG and A decreased 6% to $13,700,000 and as a percent of revenue was 24.4% compared to 27.3% last year. This decrease was driven by lower technology and insurance costs for the quarter, partially offset by increases in payroll and benefits and expenses related to the pilot of laser hair removal. Speaker 100:18:12Q4 adjusted EBITDA was $19,300,000 an increase of 0.3% versus last year. 4th quarter adjusted EBITDA margins decreased 170 basis points to 34.2% driven by higher advertising, some of which was a shift into the 4th quarter and expenses related to our laser pilot. GAAP net income increased 59.1 percent to $3,600,000 while adjusted net income declined from $48,700,000 in Q4 2022 to $6,000,000 in Q4 2023, primarily due to the income tax benefit recognized in fiscal 2022 from the release of a valuation allowance on deferred tax assets. For the full year, we opened 100 net new centers, approximately 10.6 percent unit growth, above our long term high single digit growth target. System wide sales increased 6.3 percent to $955,000,000 and total revenue increased 6.6 percent to $221,000,000 and same store sales increased 2.9%. Speaker 100:19:25Top line growth was driven by centers opened and increased spending by guests at our centers. Full year SG and A increased 0.9 percent to $59,500,000 and as a percent of revenue was 26.9 percent compared to 28.4% last year. This improvement was driven by lower professional fees and technology costs for the year. Adjusted EBITDA was $76,000,000 an increase of 6.1% compared to 71.6 $1,000,000,000 in fiscal 2022. Adjusted EBITDA margins decreased slightly by 10 basis points year over year to 34.4%, partially due to increased corporate marketing and expenses related to our laser pilot. Speaker 100:20:10Full year interest expense increased to $26,700,000 from $23,600,000 in 20.22, primarily as a result of higher interest rates following our refinancing, which closed in April 2022. Lastly, adjusted net income declined to $22,500,000 in 2023 from $71,500,000 in 2022 due to the income tax benefit we recognized in fiscal 2022 related to the release of the valuation allowance on deferred tax assets. And GAAP net income decreased to $12,300,000 from $13,600,000 the prior year. Turning to the balance sheet. We ended the quarter with $52,700,000 in cash and $394,000,000 outstanding under our senior secured notes. Speaker 100:21:02Our $40,000,000 revolver remains fully undrawn. Net leverage at the end of fiscal 2023 was 4.4 times adjusted EBITDA. Keep in mind that we spent $30,000,000 in fiscal 2023 to buy back stock. Excluding this, we would have been approximately 4 times levered. Over the past 14 months, we fully utilized our $40,000,000 stock buyback authorization. Speaker 100:21:28For fiscal 2024, we plan to continue to delever nearly an additional full turn to approximately 3.5 times based on our fiscal guidance that I'll give shortly. Net cash provided by operating activities was $55,600,000 in fiscal 2023 compared to less than $1,000,000 in investing outflows, a staple of our asset light, capital light model. Turning now to our updated outlook for 2024. As a reminder, both fiscal years 20222023 included a 53rd week. We will return to a 52 week year 2024. Speaker 100:22:07We estimate that the contribution of the 53rd week is approximately equal to an average 4th quarter week. As David mentioned earlier, we plan to open 75 to 80 net new center openings in 2024. Nearly all of our 2024 openings will be from existing franchisees. Looking at the current development schedule and commitments, the timing of these openings will be back half weighted within an estimated 1 third in the first half and approximately 2 thirds in the second half. We expect 7 net new openings in Q1. Speaker 100:22:42From a top line standpoint, we expect system wide sales between $1,000,000,000 $1,025,000,000 which represents a growth rate of approximately 6.5% to 9 232,000,000 Beginning in 2024, we will remove the surcharge to franchisees that we put in place during COVID to help offset elevated supply chain costs, which will impact full year 2024 revenue. We expect system wide sales and revenue to be the lightest in Q1 and heaviest in Q2 consistent with last year and slightly more weighted towards Q3 versus Q4 compared to prior year. We also expect 2% to 5% same store sales growth for the year. We anticipate Q1 to be the lowest with a consistent ramp up in same store sales throughout the year as the in center sales initiatives that David mentioned take root. Our overall top line outlook assumes that our growth initiatives will help drive new guests to the brand and increase average ticket and frequency among existing guests as we progress through the year. Speaker 100:23:57We expect to drive relatively modest gross margin expansion. Our model naturally generates meaningful SG and A expense leverage and we are reinvesting a portion of this in 2024 to support our strategic initiatives and growth. Our adjusted EBITDA outlook is approximately $75,000,000 to $80,000,000 First, this range includes the full year impact from investments we made in key strategic hires in 2023. 2nd, this range includes approximately $4,000,000 of operating expenses, which are foundational and mostly one time in nature to support our expanded laser hair removal pilot that David discussed. The majority of these expenses will be incurred in the back half of this year. Speaker 100:24:41As David mentioned, we are still in the early stages of this pilot and while we've seen encouraging results so far, we remain focused on our strong and resilient core service offering waxing. Excluding the laser investment, we would expect to see approximately 130 basis points of adjusted EBITDA margin expansion for our core waxing business in 2024. We expect approximately $28,000,000 of interest expense this year. We currently believe our 2024 effective tax rate will decrease to approximately 25% before discrete items. Given our capital structure, we expect our blended statutory tax rate will be 21% and expect it to increase over time as pre IPO shareholders exchange their Class B shares for Class A shares. Speaker 100:25:31As a result, we expect adjusted net income between $22,000,000 25,000,000 dollars In summary, we are entering 2024 with confidence in the strength of our resilient asset light model, recurring predictable visits from our core guests and well capitalized franchisee base. We are pleased with the progress we have made in our in center sales growth strategy in center sales growth strategy and we'll focus on driving and obtaining new guests in 2024. We believe we are making investments in the right areas to extend our position as the undisputed hair removal category leader and continue to take share in this highly fragmented category. We'd now like to open up the call for questions. Operator? Operator00:26:13Thank you. And our first question coming from the line of Randy Konik with Jefferies. Your line is now open. Speaker 400:26:48Thanks a lot and good morning everybody. I guess David, maybe we could get a little bit more of a deeper discussion on learnings from the brow test, the continued testing of laser. Maybe give us some perspective on what you're seeing in terms of lift in revenue per visit? What are you seeing in the differences in the type of guests entering to test those products? Are they already waxed customers that are now trying in an additional service or vice versa? Speaker 400:27:23Just be really helpful to understand what you're seeing more specifically. And then as it relates to just long term store growth, we're coming off a year where you had peak, I think, unit openings ever showing a lot of underlying strength in demand from existing franchisees. What do you think is a kind of a doable long term kind of thought around openings per year? Would we be thinking this $75,000,000 to $80,000,000 is kind of the most realistic to think through over the medium term? Just that would be helpful as well. Speaker 400:28:03Thanks guys. Speaker 200:28:05Sure, Randy. Good to talk to you. Let me maybe take those in reverse order, if that's okay. As it relates to kind of our view on new units per year, the high single digit outlook for 2024 is in line with our long term growth algorithm. We're taking a deliberate approach on markets this year. Speaker 200:28:25As you mentioned, Randy, we were well ahead of our high single digit algo the last 2 years and we plan to focus on markets this year that have had less development activity over the last couple of years to allow those markets that were most active time to absorb those centers. We believe delivering the high single digit unit growth after 2 years of exceeding these targets is candidly a testament to the strength of the overall model. We have a robust pipeline of licenses that gives us confidence and visibility to delivering high single digit unit growth, not just for 2024, but for 2025 and beyond. So overall, I think we continue to feel really good about kind of our unit growth algorithm. As it relates to laser, you may recall, we had a handful of initial objectives we wanted to pressure test in this pilot. Speaker 200:29:181 is can we attract more new guests to the brand with laser? 2nd is, can we increase share of wallet from our existing waxing guests? And the overall assessment was can we enhance what we think are already robust four wall economics. So the trends to date have demonstrated encouraging results on all of these. The one franchisee that is participating in our pilot and the 6 center pilot up in New York has seen enough to want to extend to some additional centers in the same market. Speaker 200:29:52We still have some things to learn. So we do plan the purpose of extending the pilot into other centers and other markets this year is to really further learn some of the items that we haven't figured out with 19, 20 weeks into our initial phase of the pilot. I do want to remind Randy, you and everyone that we continue to view laser as additive and accretive to our core business. We do remain the dominant player in our category and we think our core business remains very strong. As it relates to brow tinting, the original thought there was can we use brow tinting as a basket driver to increase dollars per ticket for our guests. Speaker 200:30:37And ultimately, we would like to use that as a behavioral change, where we can maximize revenue in the same 15 minute window that we're using for the eyebrow. Eyebrows are number 2 service of all of our core service SKUs. So the play there is really can we get folks to buy 2 services and we optimize the same 15 minute window. We've seen enough there in the tests. Our wax specialists are really encouraged by the brow tinting. Speaker 200:31:07Our guests are the new formula is resonating with their guests. That's what's really driving our decision to roll this out network wide later this year. Hopefully, we only address Speaker 400:31:19most of your share. Very helpful. And just a quick follow-up on just on capital structure. How do we you bought back nice amount of stock, you've fully completed the authorization on the share repurchase program. How do you want us to think about optimal leverage ratios, your thirst for, the Board for future share repurchase activity? Speaker 400:31:45Just kind of remind us how you think about capital structure in the business given the healthy amount of strong and predictable cash flow? Thanks guys. Speaker 200:31:53Yes. Thanks Randy. So our asset light, capital light model does continue to enable us to generate meaningful free cash flow. So I think it really gives us flexibility. We will continue to evaluate best options on excess cash, how to deploy that and drive value for shareholders. Speaker 200:32:12We'll continue to evaluate that with our Board, Randy. Speaker 400:32:17Thanks guys. Operator00:32:20Thank you. And our next question coming from the line of Lorraine Hutchinson from Bank of America. Your line is now open. Speaker 500:32:31Hi, this is Melanie on for Lorraine. I was just hoping you could break down the components of the 2024 comp guidance. What are the puts and takes to achieve the low end versus the high end? And is there any implication for price changes for the year? Thanks. Speaker 100:32:47Yes. Hi, Melanie. This is Stacy. Thanks for being on the call. The guidance we gave was 2% to 5% for the year. Speaker 100:32:56And as we look at that over the course of the year, we'll ramp as the number of initiatives that David spoke about both in center and from a marketing perspective as those continue to gain traction. And so think of that as you go through the year, Q1 will be the lowest and we'll continue to ramp. From a system wide sales perspective, similarly, Q1 will be our lightest quarter, with Q2 being the heaviest quarter, which is similar to what we've seen in the past. From a pricing perspective, we have not baked in kind of an EWC corporate enterprise wide guidance into our guide on the top line. However, as you know, our franchisees often take price where they think that it is appropriate. Speaker 100:33:40And we will continue to monitor, is there opportunity, whether that is again a broad based price increase recommendation or even service by service. But today that's not necessarily baked in into those projections. Speaker 500:33:55Thank you. Speaker 100:33:58Thank you. Operator00:34:00Thank you. One moment please for our next question. And our next question coming from the line of Scot Ciccarelli from Truist. Your line is open. Speaker 600:34:12Hey, good morning. This is actually Josh Young on for Scott. So another one on that 24 sales guidance. What have you guys baked in, in terms of trends for the different guest cohorts, specifically around that more episodic guests? Speaker 100:34:26So we don't really break that out as far as how that would come into play on the guidance. But what I would tell you is as we exited Q4, I think from a macro perspective, not big changes, right? Not necessarily a deterioration, but not really an improvement. We had started to see an improvement in that, call it, non core guest as we entered into Q4, as a result of the number of things that we were doing. But we haven't really we're not breaking that out. Speaker 100:34:54Our wax pass or core guests, right, which is wax pass and our routine guests, those continue to be very strong and their behavior has not changed as it relates to their spend and their frequency of visits. Again, that represents a little more than 75% of our total system wide sales. Anything to add? Speaker 200:35:12No. The only thing I would add to that Josh is, as we had mentioned in our prepared remarks, we've onboarded this new media agency that's hyper focused on driving in center reservations. We have a number of initiatives focused on driving new guests to the brand. And we also candidly in this macro environment believe we can control the things that we can control. So we're redeploying our field trainers to embed them in markets working with our franchisees to drive impact at the local level. Speaker 200:35:43Now a number of those initiatives we would expect to see materialize in terms of tickets and transaction growth throughout the year. So we feel very good that about our overall guidance, but it will build we do expect that Speaker 400:35:58to build throughout the year. Speaker 600:36:01Yes, that's helpful. Thank you. And then one more follow-up, if you could talk about the trends you're seeing in terms of hiring, retaining rack specialists And then any thoughts there as it relates to the outlook for 2024? Speaker 200:36:13You bet. So candidly, we ended the year, we think in a very healthy position in terms of overall network levels of staffing. The average center had the requisite number of target number of wax specialists, our operations and industry relations teams supporting our franchisees made some good headway throughout 2023 and actually elevating the mix of our more experienced waxers relative to our less experienced waxers. We've extended our beauty school partnership programs. I think we're now in 31 schools in 8 different states. Speaker 200:36:47So overall, I think we feel like the network is adequately staffed and we are well positioned to support continued growth for the brand. Speaker 300:36:58Got it. That's helpful. Thank you. Operator00:37:02Thank you. And our next question coming from the line of Corrine Wolfmeyer with Piper Speaker 700:37:14I'd like to touch a bit on the expectations for EBITDA for the year. I think you said about like excluding the laser investment about 100 and 30 basis points of margin expansion. Is that how we should be thinking about the expansion beyond 2024? And then as you continue to roll out laser, should we expect further investments in the out years to help support that? Or is this more of a one time thing here in 2024? Speaker 700:37:43Thank you. Speaker 100:37:44So we haven't given guidance, obviously, outside of 2024. But I think as you think about that, right, we show typically we show leverage on our SG and A and then I would consider some level of margin expansion, gross margin expansion would be built into those numbers. So you would expect some level of expansion year over year for sure. From a laser perspective, the investments that we're making this year, some of those are just one time foundational type investments, some of which are also to build the infrastructure that we would need to expand this test and investments, but not, I wouldn't assume at this level. Speaker 700:38:28Very helpful. Thank you. And then if you could just touch a little bit on what's driving the improvement that you saw in Q4 for those episodic guests. How much of it do you think is attributed to your increased marketing efforts that you've been implementing versus just general market improvement? Thanks. Speaker 800:38:49Hi, thanks for the question. This is Andrea. I'll take that one. So when we think about our marketing efforts, it's really focused on 2 segments of our guest population. 1st and foremost, bringing new guests to the brand and secondarily, making sure that we're increasing the conversion of wax pass once we have guests in the fold. Speaker 800:39:10And so that really is our focus as opposed to the smaller segment of the guest population that is more episodic, as you said. That said, we do think about what will motivate that population and we know which portion of that segment is responsive to promotions. We can be very tailored in doing that, so that we're not promoting more often than necessary or doing things in a blanket way. And so some of that certainly does help as we think about the right times and tactics to use in increasing visits among that episodic guest. Operator00:39:49Very helpful. Thank you. Thank you. And our next question coming from the line of Dana Telsey with Telsey Advisory Group. Your line is open. Speaker 500:40:02Hi, good morning, everyone. As you think about market pricing, how do you think about it this year as compared to last year? How do you think of pricing whether it's for Wax Pass, for different services? And given that you set the market pricing, any changes that you expect as we go through the year? And then I believe that one thing you are working on was launching a new center opening playbook in this upcoming Q1. Speaker 500:40:27Where do you stand on that? What will be the differences? And is there a different cadence this year of the timing of new center openings versus last year? Thank you. Speaker 200:40:38Hey, Dana, this is David. Let me start with the NCO playbook and then I'll hand it off to Andrea on pricing. So I think we've talked on prior calls that we've been studying new centers that have opened over the last couple of years that have performed the best. We've refined our playbooks, we've made additions. These are not wholesale new written playbooks, but in some cases we've dramatically modified. Speaker 200:41:01These modifications are informed with data to be a bit more prescriptive on the pre opening spend requirements in the channels where our franchisees should spend, all of that is important to ensure that they open with the requisite number of new guests in their file on day 1. We also want to ensure post day 1 opening that they continue what are the marketing activities and the digital channels they should be using to ensure they can continue to drive momentum. And then finally, we've analyzed kind of the both the headcount numbers and the levels of experience for our wax specialists and our center managers and we've seen so we're being more prescriptive on what does the staffing model need to look like in day 1, what does it need to look like in month 3, in month 6. Ultimately, these centers have driven higher sales and greater predictability versus the average benchmark and they're just faster revenue ramps. So we dialed out the playbook. Speaker 200:41:59We shared that this was coming with our franchisees at our Vegas conference a couple of weeks ago. So we will be rolling this out across the network this year. As it relates to pricing, as you know, Dana, we always evaluate this and when we make a recommendation to our network, it's typically informed with either guest survey work or price elasticity work as it relates to the things we're looking at in 2024, I'll pass it over to Andrea to address that. Speaker 800:42:32Sure. Hi, Dana. So in thinking about what the network needs to hear from us in terms of pricing insights, we're obviously looking at past trends for how the market has reacted, how the how our target audience has reacted to price changes. We're looking at the latest transaction trends, certainly thinking about our costs as well as very, very importantly 4 wall margins for our franchisees. And then also thinking about what the rest of the market may be doing and what elasticity, as David said, we think that there is at this time. Speaker 800:43:06So we're always looking at that, always pulling in, a wide array of data points to determine, what insights we want to provide to our franchisees. Speaker 100:43:18Dana, I think you also asked Speaker 400:43:19the question about the timing Speaker 100:43:20of the new seizures. Yes. And so it will be back half weighted, a third roughly in the first half and 2 thirds in the second half. And then we also talked about Q1 that we expect to open 7 net centers. Speaker 500:43:34Thank you. Thank Operator00:43:38you. One moment for next question. And our next question coming from the line of Simeon Gutman from Morgan Stanley. Your line is open. Speaker 900:43:50Hey, good morning, everyone. First question, Stacy, the extra weeks that we had, the are you suggesting that sales and EBITDA are the right way that they were even or is there a greater EBITDA contribution? And if you could just remind us why do we have 53 weeks 2 years in a row? Speaker 100:44:10So the contribution, yes, I think in rough estimates is about an average 4th quarter week is what we're using for kind of line and bottom line guidance. And the reasons we had it for 2 years, I was not here for that. David, this was just get on to a regular retail calendar. This 1st year was do you recall what that? Speaker 200:44:29I think the second year was just aligned with everyone else's retail calendar. Speaker 900:44:34Okay. No worries. It's a minor question. The other one, this is back to the 2.5 comps, which you've gotten a lot of different ways because if 75% of your business is relatively recurring, trying to think about it in different buckets, meaning is the wax pass customer, is it frequency or is there some ticket? I know you mentioned we're not we don't explicitly think about it that way or ticket. Speaker 900:44:58Trying to understand what is driving the business. Is it mature versus immature stores? Any other breakdowns that you can provide? Speaker 100:45:10Well, so as is typical when we look at our comp, I mean the ramping centers are the biggest driver of that comp as we move into the 13th month. So that we would expect to be continue in just the New Year. Speaker 200:45:29No, Randy, I mean, you're familiar enough with our model. Ramping is usually in has an outsized impact on the overall comp in terms of the number and we're expecting this year that the ramping centers will be a bigger contributor to the comp than the mature centers. Speaker 900:45:45Okay. Thank you. Sure. Operator00:45:49Thank you. And our next question coming from the line of John Heinz Bockel with Guggenheim Securities. Your line is open. Speaker 1000:46:00So guys want to start with, it looks like adjusting for the extra week, right, that AUV sort of flat in 2024 versus 2023. So my guess down in the first half, up in the second. Would that be right? And when I think about the drivers of that, is that more the units that have opened in the last 2 years picking up or better performance from centers this year? And then I guess the last part of that, right, if I think about maybe David touch on the maturation curve, right, because I think normally you've opened up at maybe $450,000,000 in year 1. Speaker 1000:46:39Can we now do you think with the playbook we can now do $500,000,000 $500,000,000 plus in year 1? Speaker 200:46:47I would tell you, John, on this most recent point on NCOs, that would be the goal. We want to ramp faster. We are not immune to the elevated construction costs. When we went public in 2021, the average build out cost was $350,000,000 that's crept up to $400,000,000 to $450,000,000 I think our development teams have done a great job value engineering cost out of the fixtures to absorb partially absorb some of the elevated construction costs. But when you factor that in with elevated labor costs in various markets, we want to ramp faster. Speaker 200:47:20And the 450 has been our historical ramp. Candidly, that's been consistent cohort to cohort to cohort. But the purpose of the NCAA playbook is to drive the average center to be north of that, so our franchise owners can get to the very attractive cash on cash returns faster. In terms of the your questions on AUVs being flat in terms of the overall drivers, I would say we're focused on, as we outlined in our prepared remarks, new guest acquisition across the brand for every center in driving greater rate and frequency throughout the system. So if I put aside the ramping centers, which you can kind of get lost in how much of that is just natural ticket growth because of the maturation. Speaker 200:48:13We do expect to drive our mature centers continue to drive strong four wall profitability, But the initiatives that we've outlined for 2024, we expect to drive both more tickets, more guests into those centers and a greater spend from the average ticket within those centers. So I don't know if that's directly addressing your question, John, but our goal this year with the priorities and initiatives that we've outlined is to drive improvement in what we think are already robust four well economics, but to drive improvement in our mature centers through both the addition of new guests and increased spend from existing guests. Speaker 1000:48:56Well, as a follow-up, you raised the point right of higher CapEx, right. So I think about and I know you've done this in the past like with the ancillary supplies. What else can you do to reduce the cost of operations right for a franchisee? And that kind of brings us back to I know you've been thinking about over the years supply chain on wax and getting that cost down and passing that along. Is that now more urgent than it might have been or same? Speaker 200:49:27I would say we've always viewed that with a high priority. I mean, we recently I think Stacy touched on this in her prepared remarks as we've been monitoring ocean freight. Speaker 400:49:38A couple Speaker 200:49:38of years ago, we put in place this freight surcharge to cover those elevated costs. Those have dropped down to a level where we could remove that and that should generate couple of $1,000,000 on an annualized basis of savings. If you think about all the stuff that's not doesn't sound that exciting, but literally the wax applicator blades, the table paper, the gloves that we use that our aestheticians use in providing the service, we are constantly monitoring the markets and working with our vendor partners to drive those costs down. On an individual service basis, it's a few cents here and there, maybe a dollar, but that ultimately adds up for our franchisees. So our supply chain team is candidly it's not a new priority or an elevated priority. Speaker 200:50:21We've been doing this over the last several years pre COVID and post COVID to ensure we can control what we can control to help our franchisees maximize profitability within their 4 wells. Speaker 1000:50:33Thank you, guys. Speaker 900:50:34Sure. Operator00:50:36Thank you. Our next question coming from the line of Jonathan Komp with Baird. Your line is open. Speaker 300:50:51Yes. Hi, good morning. David, I wanted to just follow-up a little further on the development plans. You touched on a few markets sort of digesting the growth the last few years. And can I just ask, are you seeing any divergences in the opening performance or volumes when you look across markets? Speaker 300:51:09And then, as we think about the plans this year, just 2 thirds back weighted on openings, Can you comment on the visibility since that looks quite a bit different from last year? Speaker 200:51:21Yes. I would say, John, thank you for the question. That overall performance is Heinebockel, I just mentioned in our question and answer session there. We continue to see AUBs at 450, but we want those to be higher to get our new centers faster to breakeven and a faster ramp to get to the very robust cash on cash returns. So we haven't seen a degradation in opening performance, but I would say we are motivated to open with faster ramps than what our than our brand has experienced over the last several years. Speaker 200:51:58I wouldn't look too much into the timing. The demand remains incredibly robust from both our existing partners, our growth partners and we still have a number of folks looking for entry points into our network. So in terms of the timing and shaping of the NCOs, I think Q1 last year we were at 34. There was no real magic to that delivering 34 and our 7 that we've guided to this year just given we're so close to in the Q1, we wanted to be a bit more prescriptive. But I wouldn't look too much into the 1 third front half, 2 thirds back half. Speaker 200:52:32That's truly where just kind of the timing of what we've slated to open this year is expected to fall. Speaker 300:52:39Okay. That's really helpful. And one follow-up, if I could just ask on the laser initiative. It looks like corporate started recruiting last month for a fairly senior role to lead that effort. So David, I'm wondering if you could just comment on what we should read into maybe the multi year aspirations as you start to line up? Speaker 300:53:02It looks like maybe some more corporate resources behind that division. Speaker 200:53:07Yes, John, great of course. Great question. As I had mentioned earlier, we do view laser as an accretive and additive component to our core business. Our franchisee has been an amazing partner in terms of the effort and resources he's invested to help us pilot this in the handful of centers in New York. Candidly for our corporate staff, we have maintained focus on delivering our core business and supporting our franchisees and our core waxing business. Speaker 200:53:37So while this laser pilot, we've given this a fair amount of air cover as we didn't want to catch anyone off guard that we're dabbling in this, but it's been a little bit of a night and weekends project for our corporate staff. We've seen enough in the trends to say it's certainly worth making a few investments in some dedicated resources to ensure we can further support this extended pilot. I hope that helps, John. Speaker 300:54:00Yes. Very helpful. Thanks again. Operator00:54:05Thank you. And I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. David Willis for any closing remarks. Speaker 200:54:14Olivia, thank you for hosting today and thank you everyone for your time on the call today. We look forward to speaking with you in the days and the weeks to come. Have a great day. Operator00:54:25Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallEuropean Wax Center Q4 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K) European Wax Center Earnings HeadlinesElevated Risks Justify A Cautious Approach To European Wax CenterApril 23 at 10:19 AM | seekingalpha.comFigs, E.W. Scripps, MGM Resorts, European Wax Center, and WillScot Mobile Mini Shares Are Falling, What You Need To KnowApril 16, 2025 | msn.comTrump’s Secret Social Security Plan?In less than a decade, Social Security could be out of money. But a surprising plan from Trump’s inner circle may not just save the system — it could unlock a major opportunity for savvy investors. Financial insider Jim Rickards calls it “Social Prosperity,” and says those who act now could see the biggest gains.April 26, 2025 | Paradigm Press (Ad)Dave & Buster's Interim CEO Says Chain 'Unwinding' Past MistakesApril 8, 2025 | msn.comEuropean Wax Center price target lowered to $5 from $6 at TruistApril 8, 2025 | markets.businessinsider.comEuropean Wax Center, Inc. Announces Inducement Grants Under Nasdaq Listing Rule 5635(c)(4)April 7, 2025 | globenewswire.comSee More European Wax Center Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like European Wax Center? Sign up for Earnings360's daily newsletter to receive timely earnings updates on European Wax Center and other key companies, straight to your email. Email Address About European Wax CenterEuropean Wax Center (NASDAQ:EWCZ) operates as the franchisor and operator of out-of-home waxing services in the United States. It offers body and facial waxing services; and pre- and post-service products, including ingrown hair serums, exfoliating gels, brow shapers, and skin treatments. 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There are 11 speakers on the call. Operator00:00:00Good morning, ladies and gentlemen. Thank you for standing by. Welcome to European Wax Center's 4th Quarter and Full Year 2023 Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a Q and A session. Operator00:00:17In order to facilitate as many participants as possible, we ask that you please limit yourself to one question and one follow-up during the Q and A session. On the call today are David Willis, Chief Executive Officer and Stacy Shirley, Chief Financial Officer and Andrea Wasserman, Chief Commercial Officer. I would now like to turn the conference over to Stacy for opening remarks. Ma'am, you may begin. Speaker 100:00:47Thank you, and welcome to European Wax Center's 4th quarter fiscal 2023 earnings call. For today's call, David will begin with a brief review of our Q4 and full year performance and discuss our priorities for fiscal 2024. Then I will provide additional details regarding our fiscal 2023 financial performance and our fiscal 2024 outlook. Following the prepared remarks, we will be available to take questions. Before we start, I would like to remind you of our legal disclaimer. Speaker 100:01:17We will make certain statements today, which are forward looking within the meaning of the federal securities laws, including statements about the outlook of our business and other matters referenced in our earnings release issued today. These forward looking statements involve a number of risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings as well as our earnings release issued today for a more detailed description of the risk factors that may affect our results. Please also note that these forward looking statements reflect our opinions only as of the date of this call, and we take no obligation to revise or publicly release the results of any revision to our forward looking statements in light of new information or future events. Also during this call, we will discuss non GAAP financial measures, which adjust our GAAP results to eliminate the impact of certain items. Speaker 100:02:09You will find additional information regarding these non GAAP financial measures and a reconciliation of these non GAAP to GAAP measures in our earnings release. A live broadcast of this call is also available on the Investor Relations section of our website at investors. Waxcenter.com. I'll now turn the call over to David Willis. Speaker 200:02:30Thank you, Stacey, and good morning, everyone. Thank you for joining us today. We ended 2023 on a strong note with 4th quarter performance in line with our expectations. We made progress on our strategy of expanding net new centers and driving in center sales, which are both key to the European wax center growth story. Additionally, we were pleased with our ability to drive in center reservations during the quarter, which capped off a solid year of growth for European Wax Center. Speaker 200:03:04In 2023, we opened 100 net new units, driven by our committed franchisees and are proud to have delivered meaningful top line and bottom line growth across the board, generating $955,000,000 in system wide sales, dollars 221,000,000 in revenue and $76,000,000 in adjusted EBITDA. Even in a challenging macroeconomic environment, the European wax center business model is consistent, anchored by the resiliency of our core guests whose commitment to their personal care routines did not waver throughout the year. Reflecting on my 1st 6 months as CEO, I could not be prouder of our teams. I want to thank our associates, franchisees and in center partners for their relentless focus on the work that drives results for our network and for living our values every day. This year, we're excited to celebrate the 20th anniversary of the European Wax Center brand. Speaker 200:04:11In 2004, our founders created this category of out of home waxing when they realized that waxing was an essential and recurring service often performed in salons as an afterthought. They introduced a high standard of professionalism by creating a business concept solely focused on a consistent hygienic and efficient wax experience. 20 years later, we remain the undisputed leader in this industry. I believe that our leadership team and board have advanced our founders' vision and set our company on a path to unlock the true potential of European wax center with an asset light, predictable, high growth franchise model. In 2023, we achieved several milestones as a brand from strengthening our leadership team to deepening our relationships with our core guests and franchisees to innovating our product offerings. Speaker 200:05:16We work to position European Wax Center for further growth. Importantly, we delivered on both of our key growth vectors, expanding our footprint through new net center openings and driving in center sales, which benefits system wide sales and same store sales growth. I'll discuss both of these in more detail now. I'll start with our unit growth vector. In 2023, we delivered over 10% unit growth for a 2nd year in a row, surpassing 1,000 centers nationwide and we are incredibly pleased to have met the high end of our fiscal 2023 net new unit guidance. Speaker 200:06:02We ended the year strong in Q4 by opening 18 net new centers across 13 different states. 100% of our new center openings in 2023 came from existing franchisees, which speaks to the commitment and excitement they continue to have for the European Wax Center brand and our business model. Looking ahead in 2024, we expect to deliver 75 to 80 net new units, in line with our high single digit unit growth algorithm. We're pleased that our franchisees remain well capitalized and committed to growing with our brand. Their continued demand underpins our robust development pipeline of over 370 commitments and provides us visibility to be able to continue to deliver against our high single digit unit growth algorithm for 2025 and over the long term. Speaker 200:07:05In partnership with our franchisees, we are focused on growing the top line in an existing centers, particularly through new guest acquisition, while taking a deliberate approach to new center openings in 2024 with focus on markets with less development activity over the last few years. To support our franchisees, our operations team is putting an even greater focus on refining and evolving our new center opening best practices, which in turn enhances our already strong unit economics. One initiative we're particularly excited about is the network wide launch of our improved data driven pre opening playbook. This playbook highlights some of our best in class centers that opened on day 1 with both the right number of new guests in their file and appropriately trained staff, which led to higher sales, revenue and predictability compared to centers that opened without these elements. We believe this playbook will be a powerful tool for our franchisees moving forward. Speaker 200:08:17Before I turn to our next growth vector, I wanted to touch on our recent brand conference. Just 2 weeks ago, our teams were in Las Vegas with our franchisees. We spent the time hearing from those across our team and our network, sharing best practices and aligning on areas of focus for the brand and franchisees moving forward. We celebrated the wins we've had over the last year, but more importantly kept our focus on the growth and opportunity we have together ahead. Our franchisees walked away from the conference feeling excited and confident in the direction of European Wax Center. Speaker 200:08:59Turning to our 2nd growth vector, driving in center sales, which benefits system wide sales and same store sales growth. I'll start with our guest trends in Q4. As expected, our core guests, which include both Wax Pass and routine guests remained consistent in their frequency and spend. These guests remain committed to their personal care routines a recurring and reliable revenue stream for our brand. In addition, exiting our Q3 earnings call, transactions among our less frequent guests remained stable. Speaker 200:09:40Driven by these stable transaction trends in our refined media strategy, full year 2023 system wide sales, revenue and same store sales came in above the midpoint of the guidance we provided in November. As we discussed last quarter, we remain focused on driving visits from both new and existing guests as well as attracting more guests to the brand through our attract more, buy more, visit more marketing strategies under Andrea's leadership. We believe that our evolved approach to our commercial and data insights capabilities Speaker 300:10:19as well Speaker 200:10:19as our data driven marketing and media strategy will allow us to deliver a year of in center sales growth at 5% to 7% for system wide sales and 2% to 5% same store sales growth in 2024. There continues to be a vast opportunity to drive new guests to the brand. And as discussed last quarter, we engaged a new media agency focused on implementing a streamlined media strategy across all of our paid digital channels and search efforts. This strategy launched in Q4 with a singular focus of driving more guest reservations in centers. A key pillar of our strategy is to optimize our approach to paid media by improving the efficiency of our media spend. Speaker 200:11:14I'm pleased to share that since our new media search and performance creative agency took over in Q4, we've seen an improvement in our average cost per reservation across various search engines and social media platforms. While it is still early and we understand it will take time for this strategy to be fully implemented, we are off to a solid start and have good early reads on the reach, frequency, targeting and creative that will drive further efficiencies in these channels. We also see several areas of opportunity for us to continue to increase share of wallet from our existing guests. We previously shared that we've been testing brow tinting in select centers. Historically, guests may have waxed their brows at European Wax Center, but went somewhere else to get them tinted. Speaker 200:12:12Our team has worked to develop a proven brow tint formula, which guests have enthusiastically responded to. We've been very encouraged by our ongoing tests as we've learned that it is a lever to bring new guests to the brand and we look forward to expanding this service to our network soon. Increasing frequency among our existing guests and converting non core guests to Wax Pass user also remains a priority. As you know, Wax Pass holders visit more than twice as often and spend more than twice as much with the brand compared to our less frequent guests, making the Wax Pass membership program our most powerful frequency driver. As we've evolved our data and technology functions, we've implemented key communication flows to encourage wax pass consideration and purchase in our marketing channels. Speaker 200:13:12Last quarter, wax passes and gift cards were available online for the first time in our brand's history, which proved successful in retaining both new and existing guests. In addition, through our guest survey work, we've learned that while guests are attracted to the wax pass, they are less likely to commit to purchasing a full 9 plus service wax pass until they visited and experienced the services we provide a few times. To encourage conversion and increased frequency and loyalty, we tested a 3 plus 1 wax pass offered only to new guests to incentivize trial by driving additional visits. We were pleased with the results of the test in the Q4 and plan to roll out this network wide this spring. On the operations side, we have implemented new leadership to oversee the local marketing team supports and works directly with our franchisees. Speaker 200:14:18We've also repositioned our field trainers by embedding these experts in local markets to further aid and coach franchisees and center associates in driving ticket value and frequency in centers. These in turn drive system wide sales. Ultimately, we are confident in our ability to drive new guests to the brand while increasing average ticket value and frequency among existing guests through the initiatives I've outlined, which we believe will help us achieve another strong year of top line growth in 2024. Before I pass it to Stacy, I wanted to touch on our laser hair removal pilot. As we've discussed over the last two quarters, we believe that offering additional hair removal modalities could be an effective method of attracting new guests to the brand, increasing share of wallet from existing wax guests and enhancing already robust four wall economics over time. Speaker 200:15:23We launched our pilot laser test in 6 New York area centers in Q4 and have been pleased with the results seen thus far. We were able to generate strong sales from both new and existing guests while minimalizing cannibalization of existing core waxing and planning to make additional investments to support this test in other select states throughout the year. Stacy will provide more detail on this shortly. While we see this as a potential additive opportunity to expand our brand and the model, European Wax Center remains the dominant player in our category with the strong and resilient core service offering waxing. As we introduce laser on a pilot basis, we believe we are uniquely positioned to leverage our scale and our footprint as the experts in out of home hair removal. Speaker 200:16:29With that, I'd like to hand the call over to Stacy Shirley to review our financial performance and our guidance details for fiscal 2024. Stacy? Speaker 100:16:40Thanks, David. Before I begin my remarks, I'd like to remind everyone that in some instances, I will speak to adjusted metrics on this call. And as I mentioned, you can find reconciliation tables to the most comparable GAAP figures in our press release and 10 ks filed with the SEC today. Turning to our financial performance. As David mentioned, we delivered strong results in line with expectations, thanks in part to our core guests remaining committed to their waxing routines. Speaker 100:17:09Q4 system wide sales increased 7.2% to $241,700,000 and total revenue increased 5.2 percent to $56,300,000 Top line growth was primarily a result of unit expansion including 18 net new centers during the quarter. Same store sales also increased 1.3%. From a profit standpoint, 4th quarter gross margin improved approximately 2 40 basis points to 72%, primarily due to favorability in our wholesale margins. 4th quarter SG and A decreased 6% to $13,700,000 and as a percent of revenue was 24.4% compared to 27.3% last year. This decrease was driven by lower technology and insurance costs for the quarter, partially offset by increases in payroll and benefits and expenses related to the pilot of laser hair removal. Speaker 100:18:12Q4 adjusted EBITDA was $19,300,000 an increase of 0.3% versus last year. 4th quarter adjusted EBITDA margins decreased 170 basis points to 34.2% driven by higher advertising, some of which was a shift into the 4th quarter and expenses related to our laser pilot. GAAP net income increased 59.1 percent to $3,600,000 while adjusted net income declined from $48,700,000 in Q4 2022 to $6,000,000 in Q4 2023, primarily due to the income tax benefit recognized in fiscal 2022 from the release of a valuation allowance on deferred tax assets. For the full year, we opened 100 net new centers, approximately 10.6 percent unit growth, above our long term high single digit growth target. System wide sales increased 6.3 percent to $955,000,000 and total revenue increased 6.6 percent to $221,000,000 and same store sales increased 2.9%. Speaker 100:19:25Top line growth was driven by centers opened and increased spending by guests at our centers. Full year SG and A increased 0.9 percent to $59,500,000 and as a percent of revenue was 26.9 percent compared to 28.4% last year. This improvement was driven by lower professional fees and technology costs for the year. Adjusted EBITDA was $76,000,000 an increase of 6.1% compared to 71.6 $1,000,000,000 in fiscal 2022. Adjusted EBITDA margins decreased slightly by 10 basis points year over year to 34.4%, partially due to increased corporate marketing and expenses related to our laser pilot. Speaker 100:20:10Full year interest expense increased to $26,700,000 from $23,600,000 in 20.22, primarily as a result of higher interest rates following our refinancing, which closed in April 2022. Lastly, adjusted net income declined to $22,500,000 in 2023 from $71,500,000 in 2022 due to the income tax benefit we recognized in fiscal 2022 related to the release of the valuation allowance on deferred tax assets. And GAAP net income decreased to $12,300,000 from $13,600,000 the prior year. Turning to the balance sheet. We ended the quarter with $52,700,000 in cash and $394,000,000 outstanding under our senior secured notes. Speaker 100:21:02Our $40,000,000 revolver remains fully undrawn. Net leverage at the end of fiscal 2023 was 4.4 times adjusted EBITDA. Keep in mind that we spent $30,000,000 in fiscal 2023 to buy back stock. Excluding this, we would have been approximately 4 times levered. Over the past 14 months, we fully utilized our $40,000,000 stock buyback authorization. Speaker 100:21:28For fiscal 2024, we plan to continue to delever nearly an additional full turn to approximately 3.5 times based on our fiscal guidance that I'll give shortly. Net cash provided by operating activities was $55,600,000 in fiscal 2023 compared to less than $1,000,000 in investing outflows, a staple of our asset light, capital light model. Turning now to our updated outlook for 2024. As a reminder, both fiscal years 20222023 included a 53rd week. We will return to a 52 week year 2024. Speaker 100:22:07We estimate that the contribution of the 53rd week is approximately equal to an average 4th quarter week. As David mentioned earlier, we plan to open 75 to 80 net new center openings in 2024. Nearly all of our 2024 openings will be from existing franchisees. Looking at the current development schedule and commitments, the timing of these openings will be back half weighted within an estimated 1 third in the first half and approximately 2 thirds in the second half. We expect 7 net new openings in Q1. Speaker 100:22:42From a top line standpoint, we expect system wide sales between $1,000,000,000 $1,025,000,000 which represents a growth rate of approximately 6.5% to 9 232,000,000 Beginning in 2024, we will remove the surcharge to franchisees that we put in place during COVID to help offset elevated supply chain costs, which will impact full year 2024 revenue. We expect system wide sales and revenue to be the lightest in Q1 and heaviest in Q2 consistent with last year and slightly more weighted towards Q3 versus Q4 compared to prior year. We also expect 2% to 5% same store sales growth for the year. We anticipate Q1 to be the lowest with a consistent ramp up in same store sales throughout the year as the in center sales initiatives that David mentioned take root. Our overall top line outlook assumes that our growth initiatives will help drive new guests to the brand and increase average ticket and frequency among existing guests as we progress through the year. Speaker 100:23:57We expect to drive relatively modest gross margin expansion. Our model naturally generates meaningful SG and A expense leverage and we are reinvesting a portion of this in 2024 to support our strategic initiatives and growth. Our adjusted EBITDA outlook is approximately $75,000,000 to $80,000,000 First, this range includes the full year impact from investments we made in key strategic hires in 2023. 2nd, this range includes approximately $4,000,000 of operating expenses, which are foundational and mostly one time in nature to support our expanded laser hair removal pilot that David discussed. The majority of these expenses will be incurred in the back half of this year. Speaker 100:24:41As David mentioned, we are still in the early stages of this pilot and while we've seen encouraging results so far, we remain focused on our strong and resilient core service offering waxing. Excluding the laser investment, we would expect to see approximately 130 basis points of adjusted EBITDA margin expansion for our core waxing business in 2024. We expect approximately $28,000,000 of interest expense this year. We currently believe our 2024 effective tax rate will decrease to approximately 25% before discrete items. Given our capital structure, we expect our blended statutory tax rate will be 21% and expect it to increase over time as pre IPO shareholders exchange their Class B shares for Class A shares. Speaker 100:25:31As a result, we expect adjusted net income between $22,000,000 25,000,000 dollars In summary, we are entering 2024 with confidence in the strength of our resilient asset light model, recurring predictable visits from our core guests and well capitalized franchisee base. We are pleased with the progress we have made in our in center sales growth strategy in center sales growth strategy and we'll focus on driving and obtaining new guests in 2024. We believe we are making investments in the right areas to extend our position as the undisputed hair removal category leader and continue to take share in this highly fragmented category. We'd now like to open up the call for questions. Operator? Operator00:26:13Thank you. And our first question coming from the line of Randy Konik with Jefferies. Your line is now open. Speaker 400:26:48Thanks a lot and good morning everybody. I guess David, maybe we could get a little bit more of a deeper discussion on learnings from the brow test, the continued testing of laser. Maybe give us some perspective on what you're seeing in terms of lift in revenue per visit? What are you seeing in the differences in the type of guests entering to test those products? Are they already waxed customers that are now trying in an additional service or vice versa? Speaker 400:27:23Just be really helpful to understand what you're seeing more specifically. And then as it relates to just long term store growth, we're coming off a year where you had peak, I think, unit openings ever showing a lot of underlying strength in demand from existing franchisees. What do you think is a kind of a doable long term kind of thought around openings per year? Would we be thinking this $75,000,000 to $80,000,000 is kind of the most realistic to think through over the medium term? Just that would be helpful as well. Speaker 400:28:03Thanks guys. Speaker 200:28:05Sure, Randy. Good to talk to you. Let me maybe take those in reverse order, if that's okay. As it relates to kind of our view on new units per year, the high single digit outlook for 2024 is in line with our long term growth algorithm. We're taking a deliberate approach on markets this year. Speaker 200:28:25As you mentioned, Randy, we were well ahead of our high single digit algo the last 2 years and we plan to focus on markets this year that have had less development activity over the last couple of years to allow those markets that were most active time to absorb those centers. We believe delivering the high single digit unit growth after 2 years of exceeding these targets is candidly a testament to the strength of the overall model. We have a robust pipeline of licenses that gives us confidence and visibility to delivering high single digit unit growth, not just for 2024, but for 2025 and beyond. So overall, I think we continue to feel really good about kind of our unit growth algorithm. As it relates to laser, you may recall, we had a handful of initial objectives we wanted to pressure test in this pilot. Speaker 200:29:181 is can we attract more new guests to the brand with laser? 2nd is, can we increase share of wallet from our existing waxing guests? And the overall assessment was can we enhance what we think are already robust four wall economics. So the trends to date have demonstrated encouraging results on all of these. The one franchisee that is participating in our pilot and the 6 center pilot up in New York has seen enough to want to extend to some additional centers in the same market. Speaker 200:29:52We still have some things to learn. So we do plan the purpose of extending the pilot into other centers and other markets this year is to really further learn some of the items that we haven't figured out with 19, 20 weeks into our initial phase of the pilot. I do want to remind Randy, you and everyone that we continue to view laser as additive and accretive to our core business. We do remain the dominant player in our category and we think our core business remains very strong. As it relates to brow tinting, the original thought there was can we use brow tinting as a basket driver to increase dollars per ticket for our guests. Speaker 200:30:37And ultimately, we would like to use that as a behavioral change, where we can maximize revenue in the same 15 minute window that we're using for the eyebrow. Eyebrows are number 2 service of all of our core service SKUs. So the play there is really can we get folks to buy 2 services and we optimize the same 15 minute window. We've seen enough there in the tests. Our wax specialists are really encouraged by the brow tinting. Speaker 200:31:07Our guests are the new formula is resonating with their guests. That's what's really driving our decision to roll this out network wide later this year. Hopefully, we only address Speaker 400:31:19most of your share. Very helpful. And just a quick follow-up on just on capital structure. How do we you bought back nice amount of stock, you've fully completed the authorization on the share repurchase program. How do you want us to think about optimal leverage ratios, your thirst for, the Board for future share repurchase activity? Speaker 400:31:45Just kind of remind us how you think about capital structure in the business given the healthy amount of strong and predictable cash flow? Thanks guys. Speaker 200:31:53Yes. Thanks Randy. So our asset light, capital light model does continue to enable us to generate meaningful free cash flow. So I think it really gives us flexibility. We will continue to evaluate best options on excess cash, how to deploy that and drive value for shareholders. Speaker 200:32:12We'll continue to evaluate that with our Board, Randy. Speaker 400:32:17Thanks guys. Operator00:32:20Thank you. And our next question coming from the line of Lorraine Hutchinson from Bank of America. Your line is now open. Speaker 500:32:31Hi, this is Melanie on for Lorraine. I was just hoping you could break down the components of the 2024 comp guidance. What are the puts and takes to achieve the low end versus the high end? And is there any implication for price changes for the year? Thanks. Speaker 100:32:47Yes. Hi, Melanie. This is Stacy. Thanks for being on the call. The guidance we gave was 2% to 5% for the year. Speaker 100:32:56And as we look at that over the course of the year, we'll ramp as the number of initiatives that David spoke about both in center and from a marketing perspective as those continue to gain traction. And so think of that as you go through the year, Q1 will be the lowest and we'll continue to ramp. From a system wide sales perspective, similarly, Q1 will be our lightest quarter, with Q2 being the heaviest quarter, which is similar to what we've seen in the past. From a pricing perspective, we have not baked in kind of an EWC corporate enterprise wide guidance into our guide on the top line. However, as you know, our franchisees often take price where they think that it is appropriate. Speaker 100:33:40And we will continue to monitor, is there opportunity, whether that is again a broad based price increase recommendation or even service by service. But today that's not necessarily baked in into those projections. Speaker 500:33:55Thank you. Speaker 100:33:58Thank you. Operator00:34:00Thank you. One moment please for our next question. And our next question coming from the line of Scot Ciccarelli from Truist. Your line is open. Speaker 600:34:12Hey, good morning. This is actually Josh Young on for Scott. So another one on that 24 sales guidance. What have you guys baked in, in terms of trends for the different guest cohorts, specifically around that more episodic guests? Speaker 100:34:26So we don't really break that out as far as how that would come into play on the guidance. But what I would tell you is as we exited Q4, I think from a macro perspective, not big changes, right? Not necessarily a deterioration, but not really an improvement. We had started to see an improvement in that, call it, non core guest as we entered into Q4, as a result of the number of things that we were doing. But we haven't really we're not breaking that out. Speaker 100:34:54Our wax pass or core guests, right, which is wax pass and our routine guests, those continue to be very strong and their behavior has not changed as it relates to their spend and their frequency of visits. Again, that represents a little more than 75% of our total system wide sales. Anything to add? Speaker 200:35:12No. The only thing I would add to that Josh is, as we had mentioned in our prepared remarks, we've onboarded this new media agency that's hyper focused on driving in center reservations. We have a number of initiatives focused on driving new guests to the brand. And we also candidly in this macro environment believe we can control the things that we can control. So we're redeploying our field trainers to embed them in markets working with our franchisees to drive impact at the local level. Speaker 200:35:43Now a number of those initiatives we would expect to see materialize in terms of tickets and transaction growth throughout the year. So we feel very good that about our overall guidance, but it will build we do expect that Speaker 400:35:58to build throughout the year. Speaker 600:36:01Yes, that's helpful. Thank you. And then one more follow-up, if you could talk about the trends you're seeing in terms of hiring, retaining rack specialists And then any thoughts there as it relates to the outlook for 2024? Speaker 200:36:13You bet. So candidly, we ended the year, we think in a very healthy position in terms of overall network levels of staffing. The average center had the requisite number of target number of wax specialists, our operations and industry relations teams supporting our franchisees made some good headway throughout 2023 and actually elevating the mix of our more experienced waxers relative to our less experienced waxers. We've extended our beauty school partnership programs. I think we're now in 31 schools in 8 different states. Speaker 200:36:47So overall, I think we feel like the network is adequately staffed and we are well positioned to support continued growth for the brand. Speaker 300:36:58Got it. That's helpful. Thank you. Operator00:37:02Thank you. And our next question coming from the line of Corrine Wolfmeyer with Piper Speaker 700:37:14I'd like to touch a bit on the expectations for EBITDA for the year. I think you said about like excluding the laser investment about 100 and 30 basis points of margin expansion. Is that how we should be thinking about the expansion beyond 2024? And then as you continue to roll out laser, should we expect further investments in the out years to help support that? Or is this more of a one time thing here in 2024? Speaker 700:37:43Thank you. Speaker 100:37:44So we haven't given guidance, obviously, outside of 2024. But I think as you think about that, right, we show typically we show leverage on our SG and A and then I would consider some level of margin expansion, gross margin expansion would be built into those numbers. So you would expect some level of expansion year over year for sure. From a laser perspective, the investments that we're making this year, some of those are just one time foundational type investments, some of which are also to build the infrastructure that we would need to expand this test and investments, but not, I wouldn't assume at this level. Speaker 700:38:28Very helpful. Thank you. And then if you could just touch a little bit on what's driving the improvement that you saw in Q4 for those episodic guests. How much of it do you think is attributed to your increased marketing efforts that you've been implementing versus just general market improvement? Thanks. Speaker 800:38:49Hi, thanks for the question. This is Andrea. I'll take that one. So when we think about our marketing efforts, it's really focused on 2 segments of our guest population. 1st and foremost, bringing new guests to the brand and secondarily, making sure that we're increasing the conversion of wax pass once we have guests in the fold. Speaker 800:39:10And so that really is our focus as opposed to the smaller segment of the guest population that is more episodic, as you said. That said, we do think about what will motivate that population and we know which portion of that segment is responsive to promotions. We can be very tailored in doing that, so that we're not promoting more often than necessary or doing things in a blanket way. And so some of that certainly does help as we think about the right times and tactics to use in increasing visits among that episodic guest. Operator00:39:49Very helpful. Thank you. Thank you. And our next question coming from the line of Dana Telsey with Telsey Advisory Group. Your line is open. Speaker 500:40:02Hi, good morning, everyone. As you think about market pricing, how do you think about it this year as compared to last year? How do you think of pricing whether it's for Wax Pass, for different services? And given that you set the market pricing, any changes that you expect as we go through the year? And then I believe that one thing you are working on was launching a new center opening playbook in this upcoming Q1. Speaker 500:40:27Where do you stand on that? What will be the differences? And is there a different cadence this year of the timing of new center openings versus last year? Thank you. Speaker 200:40:38Hey, Dana, this is David. Let me start with the NCO playbook and then I'll hand it off to Andrea on pricing. So I think we've talked on prior calls that we've been studying new centers that have opened over the last couple of years that have performed the best. We've refined our playbooks, we've made additions. These are not wholesale new written playbooks, but in some cases we've dramatically modified. Speaker 200:41:01These modifications are informed with data to be a bit more prescriptive on the pre opening spend requirements in the channels where our franchisees should spend, all of that is important to ensure that they open with the requisite number of new guests in their file on day 1. We also want to ensure post day 1 opening that they continue what are the marketing activities and the digital channels they should be using to ensure they can continue to drive momentum. And then finally, we've analyzed kind of the both the headcount numbers and the levels of experience for our wax specialists and our center managers and we've seen so we're being more prescriptive on what does the staffing model need to look like in day 1, what does it need to look like in month 3, in month 6. Ultimately, these centers have driven higher sales and greater predictability versus the average benchmark and they're just faster revenue ramps. So we dialed out the playbook. Speaker 200:41:59We shared that this was coming with our franchisees at our Vegas conference a couple of weeks ago. So we will be rolling this out across the network this year. As it relates to pricing, as you know, Dana, we always evaluate this and when we make a recommendation to our network, it's typically informed with either guest survey work or price elasticity work as it relates to the things we're looking at in 2024, I'll pass it over to Andrea to address that. Speaker 800:42:32Sure. Hi, Dana. So in thinking about what the network needs to hear from us in terms of pricing insights, we're obviously looking at past trends for how the market has reacted, how the how our target audience has reacted to price changes. We're looking at the latest transaction trends, certainly thinking about our costs as well as very, very importantly 4 wall margins for our franchisees. And then also thinking about what the rest of the market may be doing and what elasticity, as David said, we think that there is at this time. Speaker 800:43:06So we're always looking at that, always pulling in, a wide array of data points to determine, what insights we want to provide to our franchisees. Speaker 100:43:18Dana, I think you also asked Speaker 400:43:19the question about the timing Speaker 100:43:20of the new seizures. Yes. And so it will be back half weighted, a third roughly in the first half and 2 thirds in the second half. And then we also talked about Q1 that we expect to open 7 net centers. Speaker 500:43:34Thank you. Thank Operator00:43:38you. One moment for next question. And our next question coming from the line of Simeon Gutman from Morgan Stanley. Your line is open. Speaker 900:43:50Hey, good morning, everyone. First question, Stacy, the extra weeks that we had, the are you suggesting that sales and EBITDA are the right way that they were even or is there a greater EBITDA contribution? And if you could just remind us why do we have 53 weeks 2 years in a row? Speaker 100:44:10So the contribution, yes, I think in rough estimates is about an average 4th quarter week is what we're using for kind of line and bottom line guidance. And the reasons we had it for 2 years, I was not here for that. David, this was just get on to a regular retail calendar. This 1st year was do you recall what that? Speaker 200:44:29I think the second year was just aligned with everyone else's retail calendar. Speaker 900:44:34Okay. No worries. It's a minor question. The other one, this is back to the 2.5 comps, which you've gotten a lot of different ways because if 75% of your business is relatively recurring, trying to think about it in different buckets, meaning is the wax pass customer, is it frequency or is there some ticket? I know you mentioned we're not we don't explicitly think about it that way or ticket. Speaker 900:44:58Trying to understand what is driving the business. Is it mature versus immature stores? Any other breakdowns that you can provide? Speaker 100:45:10Well, so as is typical when we look at our comp, I mean the ramping centers are the biggest driver of that comp as we move into the 13th month. So that we would expect to be continue in just the New Year. Speaker 200:45:29No, Randy, I mean, you're familiar enough with our model. Ramping is usually in has an outsized impact on the overall comp in terms of the number and we're expecting this year that the ramping centers will be a bigger contributor to the comp than the mature centers. Speaker 900:45:45Okay. Thank you. Sure. Operator00:45:49Thank you. And our next question coming from the line of John Heinz Bockel with Guggenheim Securities. Your line is open. Speaker 1000:46:00So guys want to start with, it looks like adjusting for the extra week, right, that AUV sort of flat in 2024 versus 2023. So my guess down in the first half, up in the second. Would that be right? And when I think about the drivers of that, is that more the units that have opened in the last 2 years picking up or better performance from centers this year? And then I guess the last part of that, right, if I think about maybe David touch on the maturation curve, right, because I think normally you've opened up at maybe $450,000,000 in year 1. Speaker 1000:46:39Can we now do you think with the playbook we can now do $500,000,000 $500,000,000 plus in year 1? Speaker 200:46:47I would tell you, John, on this most recent point on NCOs, that would be the goal. We want to ramp faster. We are not immune to the elevated construction costs. When we went public in 2021, the average build out cost was $350,000,000 that's crept up to $400,000,000 to $450,000,000 I think our development teams have done a great job value engineering cost out of the fixtures to absorb partially absorb some of the elevated construction costs. But when you factor that in with elevated labor costs in various markets, we want to ramp faster. Speaker 200:47:20And the 450 has been our historical ramp. Candidly, that's been consistent cohort to cohort to cohort. But the purpose of the NCAA playbook is to drive the average center to be north of that, so our franchise owners can get to the very attractive cash on cash returns faster. In terms of the your questions on AUVs being flat in terms of the overall drivers, I would say we're focused on, as we outlined in our prepared remarks, new guest acquisition across the brand for every center in driving greater rate and frequency throughout the system. So if I put aside the ramping centers, which you can kind of get lost in how much of that is just natural ticket growth because of the maturation. Speaker 200:48:13We do expect to drive our mature centers continue to drive strong four wall profitability, But the initiatives that we've outlined for 2024, we expect to drive both more tickets, more guests into those centers and a greater spend from the average ticket within those centers. So I don't know if that's directly addressing your question, John, but our goal this year with the priorities and initiatives that we've outlined is to drive improvement in what we think are already robust four well economics, but to drive improvement in our mature centers through both the addition of new guests and increased spend from existing guests. Speaker 1000:48:56Well, as a follow-up, you raised the point right of higher CapEx, right. So I think about and I know you've done this in the past like with the ancillary supplies. What else can you do to reduce the cost of operations right for a franchisee? And that kind of brings us back to I know you've been thinking about over the years supply chain on wax and getting that cost down and passing that along. Is that now more urgent than it might have been or same? Speaker 200:49:27I would say we've always viewed that with a high priority. I mean, we recently I think Stacy touched on this in her prepared remarks as we've been monitoring ocean freight. Speaker 400:49:38A couple Speaker 200:49:38of years ago, we put in place this freight surcharge to cover those elevated costs. Those have dropped down to a level where we could remove that and that should generate couple of $1,000,000 on an annualized basis of savings. If you think about all the stuff that's not doesn't sound that exciting, but literally the wax applicator blades, the table paper, the gloves that we use that our aestheticians use in providing the service, we are constantly monitoring the markets and working with our vendor partners to drive those costs down. On an individual service basis, it's a few cents here and there, maybe a dollar, but that ultimately adds up for our franchisees. So our supply chain team is candidly it's not a new priority or an elevated priority. Speaker 200:50:21We've been doing this over the last several years pre COVID and post COVID to ensure we can control what we can control to help our franchisees maximize profitability within their 4 wells. Speaker 1000:50:33Thank you, guys. Speaker 900:50:34Sure. Operator00:50:36Thank you. Our next question coming from the line of Jonathan Komp with Baird. Your line is open. Speaker 300:50:51Yes. Hi, good morning. David, I wanted to just follow-up a little further on the development plans. You touched on a few markets sort of digesting the growth the last few years. And can I just ask, are you seeing any divergences in the opening performance or volumes when you look across markets? Speaker 300:51:09And then, as we think about the plans this year, just 2 thirds back weighted on openings, Can you comment on the visibility since that looks quite a bit different from last year? Speaker 200:51:21Yes. I would say, John, thank you for the question. That overall performance is Heinebockel, I just mentioned in our question and answer session there. We continue to see AUBs at 450, but we want those to be higher to get our new centers faster to breakeven and a faster ramp to get to the very robust cash on cash returns. So we haven't seen a degradation in opening performance, but I would say we are motivated to open with faster ramps than what our than our brand has experienced over the last several years. Speaker 200:51:58I wouldn't look too much into the timing. The demand remains incredibly robust from both our existing partners, our growth partners and we still have a number of folks looking for entry points into our network. So in terms of the timing and shaping of the NCOs, I think Q1 last year we were at 34. There was no real magic to that delivering 34 and our 7 that we've guided to this year just given we're so close to in the Q1, we wanted to be a bit more prescriptive. But I wouldn't look too much into the 1 third front half, 2 thirds back half. Speaker 200:52:32That's truly where just kind of the timing of what we've slated to open this year is expected to fall. Speaker 300:52:39Okay. That's really helpful. And one follow-up, if I could just ask on the laser initiative. It looks like corporate started recruiting last month for a fairly senior role to lead that effort. So David, I'm wondering if you could just comment on what we should read into maybe the multi year aspirations as you start to line up? Speaker 300:53:02It looks like maybe some more corporate resources behind that division. Speaker 200:53:07Yes, John, great of course. Great question. As I had mentioned earlier, we do view laser as an accretive and additive component to our core business. Our franchisee has been an amazing partner in terms of the effort and resources he's invested to help us pilot this in the handful of centers in New York. Candidly for our corporate staff, we have maintained focus on delivering our core business and supporting our franchisees and our core waxing business. Speaker 200:53:37So while this laser pilot, we've given this a fair amount of air cover as we didn't want to catch anyone off guard that we're dabbling in this, but it's been a little bit of a night and weekends project for our corporate staff. We've seen enough in the trends to say it's certainly worth making a few investments in some dedicated resources to ensure we can further support this extended pilot. I hope that helps, John. Speaker 300:54:00Yes. Very helpful. Thanks again. Operator00:54:05Thank you. And I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. David Willis for any closing remarks. Speaker 200:54:14Olivia, thank you for hosting today and thank you everyone for your time on the call today. We look forward to speaking with you in the days and the weeks to come. Have a great day. Operator00:54:25Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.Read morePowered by